Congress and regulators slow to respond to drug pricing and shortage problem

Hospitals, doctors, and their patients are confronting two related drug access problems that should be unimaginable in American society: a shortage of essential medicines and unscrupulous price gouging. Together, these pose serious risks to public health.

The U.S. Food and Drug Administration’s (FDA) database of drug shortages currently shows a shortage of 92 medications and intravenous solutions. Puerto Rico’s slow recovery from Hurricane Maria has had a particularly deleterious impact because the U.S. territory normally produces 10 percent of the nation’s pharmaceuticals, and is also a major production hub for intravenous solutions that are the basis for delivery of numerous medications, including chemotherapy drugs.

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Apart from Puerto Rico’s devastation, severe drug shortages and even complete unavailability of some generic drugs result from the economic challenges of producing drugs with limited profit margins in a highly regulated industry. Shortages of sodium bicarbonate and calcium chloride are notable examples which are used for life threatening conditions such as sepsis.

Conversely, unethical pharmaceutical companies continue their practice of price gouging, a naked effort to maximize short-term profits at the expense of patients who desperately need their medications. More than 300 generic drugs had price increases of 100 percent or more between 2010 and 2015, according to a U.S. Government Accountability Office report on Medicare drug prices.

Nearly 50 of those price increases were by 500 percent or higher, and 15 were 1,000 percent or higher. For example, the price for a 100 tablet bottle of the generic asthma drug Albuterol Sulfate soared from $11 to $434. Pricing for the antibiotic Doxycycline Hyclate jumped from $20 to $1,849 for bottle of 500 tablets. Such irresponsible corporate behavior demands forceful action.

When medicines are either unavailable or unaffordable, it is no simple task to locate and use an alternative. Shortages result in delays or cancellation of needed patient care, according to two-thirds of hospital pharmacists surveyed by the American Journal of Health-System Pharmacy. Beyond health risks, there is added expense. Therapeutic drug substitutes cost hospitals at least $200 million every year.

The most efficient approach would be for the FDA to inspect pharmaceutical manufacturing facilities outside the United States to assure quality. Those that are pre-approved would be able to help the United States respond swiftly to price gouging or shortages. Indeed, those generic drugs currently available from only one company should be immediately approved for importation from a pre-approved manufacturer.

The fact that drug prices are substantially higher in the United States than the rest of the world means U.S. consumers effectively are paying for the pharmaceutical research and development that benefits all mankind.

It’s an ongoing American subsidy for all other nations. At the recent Davos World Economic Summit, President Trump argued for an even economic playing field, saying trade “needs to be fair and it needs to be reciprocal because, in the end, unfair trade undermines us all.” So, in future trade talks the administration should address the lack of fairness in pharmaceutical pricing.

The FDA is trying to make drugs more accessible and affordable through increased competition by encouraging more generic manufacturers to enter the market and speeding approval of new generics. But it can do more. Its generic drug approval timeline has shrunk from 36 to 20 months. Patients, though, cannot wait two years for a medication needed today. Regulators can and should continue accelerating the drug approval process.

The FDA should also establish an early-warning system of impending shortages by working with motivated partners, such as hospitals and pharmaceutical experts, whose incentives are aligned with the public interest. Monitoring the supply chain would improve our ability to predict the duration and severity of drug shortages before they occur. The FDA can also create a strategic reserve of certain essential medicines that could be available to relieve shortages.

Resolving the issue of unethical price gouging also requires prosecution of offenders. In the absence of federal lawsuits, state attorneys general are pursuing drug company violators. A coalition of 46 states is engaged in an antitrust investigation of the generic drug industry that is targeting 18 manufacturers suspected of colluding to push up drug prices.

Meanwhile, state legislators are responding to complaints about drug pricing abuses. Maryland recently enacted a law prohibiting price gouging on off-patent and generic drugs, and authorizing the state to prosecute companies that engage in price hikes high enough to “shock the conscience” of any reasonable consumer. New York and Vermont also have new laws limiting drug price increases, while California and Nevada have instituted drug price transparency laws.

As states take the lead, it’s time for the White House, Congress, and federal regulators to step up their response because the drug pricing and shortage problems are a practical and ethical imperative that must be resolved through the efforts of both state and federal government. With patient lives on the line, we cannot afford inaction.

Kenneth L. Davis M.D., is the president and CEO of Mount Sinai Health System. David L. Reich M.D., is the president of The Mount Sinai Hospital and Mount Sinai, Queens, N.Y.